Message Boards Digest

February 14, 2019

Here are the most recently added topics on the BenefitsLink Message Boards:

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perplexedbypensions created a topic in 401(k) Plans

Suspending Nonelective Safe Harbor Mid-Year

Am I reading the regulations correctly? A 401(k) plan can eliminate its 3% nonelective Safe Harbor contribution mid-year without showing that the company is operating at a loss, if the notice that was distributed in December of the prior year included language that the Safe Harbor may be suspended?
Number of replies posted  7 replies      Number of times viewed  76 views      Add Reply

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kmhaab created a topic in 401(k) Plans

1,600 Hour Minimum Service Requirement?

Is there any permissible situation where a 401(k) can exclude employees who work less than 1,600 hours in a year? I am aware of the IRS guidance on excluding part-time employees who work less than 1,000 hours, but I'm so flabbergasted to see a 1,600 hour participation requirement in a plan that was restated in 2018 that I feel I must be missing something.
Number of replies posted  12 replies      Number of times viewed  113 views      Add Reply
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perplexedbypensions created a topic in Retirement Plans in General

All in the Family: Fidelity Bond Required?

Plan's only employees/participants are a husband/wife and 3 children. Assets are held in FBO self directed accounts for each, but there are also non-qualified assets (mortgages and some other real estate), which are segregated in the owner (husband's) name, so his account is the only one affected by their value. Is he required to have a fidelity bond for the non-qualified assets? There are employees other than family members.
Number of replies posted  4 replies      Number of times viewed  38 views      Add Reply
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DW created a topic in Defined Benefit Plans, Including Cash Balance

415 Dollar Limit -- Senior Participant -- Pro Rata for Partial Years/Ages?

I've got a plan with a participant over the dollar limit late in life -- this participant wants a lump sum benefit. I don't generally deal with anything other than compensation limit issues, but advanced age (late retirement increase) and generous plan features (subsidized lump sum) are the culprit here. The basic plan is not intended to be generous enough to create limit issues. My question is, if the participant in question is something like 69 and 6 months, is there any guidance on what is acceptable for non-integer ages in terms of calculating the increased (post-65) dollar limit? For example, if the age 69 calculated limit is $3.2 million and the age 70 calculated limit is $3.4 million (for a lump sum payment form), [1] Is interpolation appropriate/allowed/required? [2] if so, is anything reasonable OK (pro rata in this case vs. a direct calculation at actual age yields a tiny difference -- let's say for the sake of discussion that one would be $3.3 million and the other might be $3,301,000)? Sensitivity is heightened since the payment form is a lump sum and the participant's separation of employment is far from amicable. (The plan document only has boilerplate language, so method isn't specified, and there is no precedent set administratively because this is the first participant in a very large plan who has ever tripped the dollar limit.) No pre-termination issues with lump sum size; the plan is far too large for that.
Number of replies posted  3 replies      Number of times viewed  35 views      Add Reply
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KMMB created a topic in Correction of Plan Defects

Minor Modification of VCP Compliance Statement

Anyone have experience requesting a "minor" modification of a VCP compliance statement? The only example in IRS guidance of a "minor" modification is a compliance statement that listed 200 affected participants; however, after recalculating the failure affected 225 participants. In our situation, the applicant got an IRS compliance statement approving a retroactive amendment adding back in a provision missing from a 2015 restatement. The compliance statement was issued over 150 days ago. The applicant recently discovered an inconsistency between the retroactive amendment and the plan's historic administration, and believes additional clarifying language (no more than a phrase or two) should have been added to the retroactive amendment to achieve the intent of the VCP filing and conform the plan document to the plan's historic and ongoing administration. At bottom, we think the fix of the document could have been better, but this is a document issue only; the plan's always been operated as it should have been. Has anyone had success requesting a "minor" modification of a VCP compliance statement under similar circumstances?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply, Inc.
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